Canadian Housing Market Rebound Underwhelms as CREA Lowers 2025 Sales Prediction

Here’s an article tailored for archyde.com, focusing on the impact of tariffs on the Canadian housing market, drawing from the provided text:

Tariffs Cast a Shadow: Canadian Housing market on Hold as Buyers Await Trade Clarity

Toronto, ON – July 15, 2025 – The Canadian housing market continues to grapple with a pervasive sense of uncertainty, largely driven by the looming threat of U.S. tariffs. Experts suggest that this economic anxiety is keeping a significant number of potential buyers on the sidelines, even as favorable conditions for homeownership exist for many.

“It’s still a market where buyers are unluckily a bit uncertain,” stated Forbes, a market analyst, in a recent interview. “Many of them who have jobs, who have security of those jobs, who have equity in homes, that would be a great time for them to make a trade to a preferred location or a larger home for their family, but they are looking at the headlines and seeing the uncertainty related to tariffs.”

The impact is palpable across the nation. While June saw a modest month-over-month increase in newly listed properties, the overall sales performance is described as a “gradual recovery from their early-year depths,” according to TD economist Marc Ercolao. He anticipates a continued, albeit “subdued,” rise in home sales throughout the latter half of the year, as pent-up demand slowly re-enters the market. However, Ercolao cautions that “economic uncertainty remains elevated, especially with Canada facing new tariff threats.”

This sentiment is echoed by BMO senior economist Robert kavcic, who identifies three key factors hindering the housing market. A “sluggish” job market, exacerbated by the trade war, is a primary concern. Coupled with mortgage rates considered “not low enough to improve the affordability calculus in a demand-sparking way,” the market faces significant headwinds.

Moreover, a shift in market psychology is also playing a crucial role. “Market psychology now appears bearish,” noted Kavcic. “Just as expectations of higher prices drove accelerating gains on the way up, the understanding that prices are falling is holding back buyers on the way down in some locations.”

The future trajectory of the housing market, particularly for Ontarian manufacturers and the broader economy, hinges significantly on the outcome of ongoing trade negotiations between Canada and the United States. With an August 1 deadline approaching, a compromise could reignite buyer confidence and foster a more “healthy market.”

However, failure to reach an agreement could prolong the current state of paralysis. “If that’s the case, then we’ll continue to have fewer sales for at least the next three or four months until the impacts of whatever comes to fruition are better known,” Forbes warned.

For now, the Canadian housing market remains in a holding pattern, awaiting clarity on trade policy before a more robust recovery can truly take root.

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This report by The Canadian Press was first published July 15, 2025.
Sammy Hudes, The Canadian Press

how do persistent affordability challenges and slower-then-expected declines in mortgage rates contribute to CREA’s revised 2025 housing sales forecast?

The anticipated surge in the Canadian housing market following interest rate pauses hasn’t materialized as strongly as predicted,leading the Canadian Real Estate Association (CREA) to revise its 2025 sales forecast downwards. This article dives into the factors contributing to this underwhelming rebound, analyzes the revised predictions, and offers insights for both homebuyers and sellers navigating this complex landscape. We’ll cover key data points, regional variations, and expert opinions impacting the canadian real estate market.

CREA’s Revised Forecast: A closer Look

On July 15, 2025, CREA announced a downward revision of its national home sales forecast for 2025. Initially projecting a moderate increase in sales volume,the association now anticipates a more subdued recovery.

Original Forecast (Early 2025): Projected a 5-8% increase in national home sales.

Revised Forecast (July 15, 2025): Now predicts a 2-4% increase in national home sales.

Key Driver of Revision: Persistent affordability challenges and a slower-than-expected decline in mortgage rates.

This adjustment reflects a growing concern that high borrowing costs and economic uncertainty are continuing to weigh on buyer sentiment, despite the Bank of Canada’s recent pauses in interest rate hikes. The housing market forecast is now leaning towards a more gradual recovery.

Factors Dampening the Rebound

Several interconnected factors are contributing to the weaker-than-expected rebound in the Canadian housing market.

Affordability Crisis

The moast important hurdle remains affordability. Years of rapid price recognition, coupled with rising interest rates, have pushed homeownership out of reach for many Canadians.

Home Price-to-Income Ratio: Remains historically high in major urban centers like Toronto and Vancouver.

Mortgage Qualification Stress Test: Continues to restrict borrowing capacity for potential homebuyers.

rent Costs: Rising rental rates are also impacting potential buyers’ ability to save for a down payment.

Interest Rate Sensitivity

While the Bank of Canada has paused rate increases, the impact of previous hikes is still being felt.

Mortgage Rates: Though stabilized, remain substantially higher than pre-pandemic levels.

variable Rate Mortgages: Homeowners with variable-rate mortgages are facing increased monthly payments, impacting disposable income.

Fixed rate Renewals: Many homeowners facing renewal are seeing substantial increases in their mortgage payments.

Economic Uncertainty

Broader economic headwinds are also playing a role.

Inflation: While cooling, inflation remains above the Bank of Canada’s target range.

Economic Growth: Slower economic growth is creating job insecurity and dampening consumer confidence.

Global Economic Conditions: International economic instability adds another layer of uncertainty.

Regional Variations in the Canadian Housing Market

The impact of the slowdown isn’t uniform across the country. Regional variations are becoming increasingly pronounced.

Greater Toronto Area (GTA): While still relatively expensive, the GTA is experiencing a more noticeable slowdown in price growth compared to previous years. Condominium sales are proving more resilient than detached homes.

Greater Vancouver Area (GVA): Similar to the GTA, the GVA is seeing a moderation in price growth. Luxury market segments are experiencing a more significant correction.

Prairie Provinces (Alberta, Saskatchewan, Manitoba): These provinces are generally experiencing more stable housing markets, driven by relatively affordable prices and strong economic conditions (notably in alberta).

Atlantic Canada: Some Maritime provinces are still experiencing strong demand, but affordability is becoming a growing concern.

Quebec: montreal’s housing market is showing signs of stabilization, with a balanced supply and demand.

understanding these regional housing trends is crucial for making informed decisions.

Impact on Homebuyers and Sellers

The revised forecast has implications for both those looking to buy and those looking to sell.

For Homebuyers:

Increased Negotiation Power: With sales slowing,buyers may have more leverage to negotiate prices and terms.

Extended Search Time: Expect a longer search process as inventory remains relatively stable.

Focus on Affordability: Prioritize finding properties that fit within yoru budget and long-term financial goals.

Consider Mortgage Pre-Approval: Secure pre-approval to understand your borrowing capacity and lock in a rate.

For Sellers:

Realistic Pricing Expectations: Avoid overpricing your property. Competitive pricing is essential in a slower market.

Property Readiness: Invest in staging and minor repairs to enhance your property’s appeal.

Marketing Strategy: Utilize a extensive marketing strategy to reach potential buyers.

be Patient: Expect a longer time on the market and be prepared to negotiate.

The Role of Government Policy & “Made in canada” Initiatives

government policies continue to shape the Canadian real estate landscape. The federal government’s focus on increasing housing supply and improving affordability is evident in initiatives like the Housing Accelerator Fund.The “Made in Canada” label, while primarily focused on promoting domestic products (as per Canada.ca), indirectly supports economic stability, which impacts the housing market. A strong Canadian economy fosters confidence and supports housing demand.

Housing Accelerator Fund: Aims to incentivize municipalities to increase housing supply.

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